Finance, Insurance, and Real Estate: Employment Growth during 1982-87

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Finance, insurance, and real estate: employment growth during 1982-87

THOMAS NARDONE

On October 19, 1987, the stock market had its largest 1day loss in history. The crash on "Black Monday" raised questions about the future strength of the finance, insurance, and real estate industries. Between late 1982 and 1987, rising real estate and financial markets made this group-often referred to as "financial services"-the source of 1.3 million new jobs.

Job growth among the principal components of the group has been uneven, however.' Increased competition brought on by deregulation in some industries affected both the extent and composition of employment growth. Indeed, in some areas there was little change in employment.

In December 1987, employment in the financial services was 6.6 million, up 24 percent from the end of 1982.2 Total nonfarm employment grew by 17 percent. Pronounced differences occurred within the major components of finance, insurance, and real estate, (See table 1.) Over the 5-year period, holding and investment companies, securities and commodities firms, nonbank credit agencies, insurance agencies, and real estate firms typically had much higher growth rates than insurance carriers and banks. (See table 2.) The last two industries, however, made up over half of the total employment in the finance, insurance, and real estate …